American States Water Company (NYSE:AWR) Q1 2022 Earnings Conference Call May 3, 2022 2:00 PM ET Company Participants Bob Sprowls - President & Chief Executive Officer Eva Tang - Senior Vice President of Finance & Chief Financial Officer Conference Call Participants Angie Storozynski - Seaport Jonathan Reeder - Wells Fargo Operator Ladies and gentlemen, thank you for standing by, and welcome to the American States Water Company Conference Call discussing the company's First Quarter 2022 Results. This call i ...

Financial Performance - Total operating revenues for the three months ended March 31, 2022, were $108,570,000, a decrease of 7.3% from $117,060,000 in the same period of 2021[27]. - Net income for the three months ended March 31, 2022, was $14,162,000, down 26.5% from $19,268,000 in the prior year[27]. - Basic earnings per common share decreased to $0.38 for the three months ended March 31, 2022, compared to $0.52 for the same period in 2021[27]. - Total operating expenses decreased to $84,205,000, a reduction of 2.0% from $86,731,000 in the previous year[27]. - Operating income for Q1 2022 was $24,365,000, down 19.7% from $30,329,000 in Q1 2021[27]. - Total operating revenues for Q1 2022 were $73,906,000, a decrease of 1.5% from $75,029,000 in Q1 2021[41]. - Net income for Q1 2022 was $8,567,000, down 29.0% from $12,231,000 in Q1 2021[41]. - Total operating expenses increased to $56,907,000 in Q1 2022, up 5.4% from $53,970,000 in Q1 2021[41]. Assets and Liabilities - Total assets increased to $1,913,932 thousand as of March 31, 2022, compared to $1,900,983 thousand at December 31, 2021, reflecting a growth of approximately 0.68%[19]. - Total common shareholders' equity reached $687,425 thousand, a slight increase from $685,947 thousand, showing a growth of about 0.21%[23]. - Current liabilities totaled $160,154 thousand, up from $155,574 thousand, marking an increase of approximately 2.5%[23]. - Long-term debt remained stable at $412,150 thousand compared to $412,176 thousand, indicating minimal change[23]. - Total current assets decreased to $65,790,000 in Q1 2022 from $75,215,000 in Q4 2021, a decline of 12.5%[38]. - Total common shareholder's equity decreased to $611,495,000 in Q1 2022 from $615,686,000 in Q4 2021, a decline of 0.3%[39]. Cash Flow - Cash flows from operating activities increased to $38,026,000 for the three months ended March 31, 2022, compared to $24,676,000 in the same period of 2021[34]. - Net cash provided by operating activities was $31,265,000 for Q1 2022, up from $22,799,000 in Q1 2021, influenced by $9.5 million in COVID-19 relief funds[50]. - Net cash used in investing activities was $31.3 million for Q1 2022, a decrease from $43.7 million in Q1 2021, with capital expenditures totaling $31.5 million[154]. - Net cash provided by financing activities was $4.2 million for Q1 2022, compared to a net cash outflow of $12.2 million in Q1 2021, due to an increase in intercompany borrowings of $18.0 million from AWR[155]. Capital Expenditures - Capital expenditures for the three months ended March 31, 2022, were $35,170,000, slightly lower than $37,093,000 in the prior year[34]. - Capital expenditures for the three months ended March 31, 2022, were $(31,465,000), slightly lower than $(31,824,000) in the same period of 2021[50]. - GSWC plans to invest approximately $404.8 million in capital infrastructure over the 2022-2024 period, with an expected increase in 2022 adopted revenues by approximately $30.3 million compared to 2021[93]. Regulatory and Compliance - GSWC received $9.5 million in COVID relief funds to assist customers with water debt accrued during the pandemic[53]. - GSWC's pending general rate case will determine new water rates for 2022-2024, with a proposed decision expected in mid-2022[160]. - The company filed a cost of capital application requesting a return on equity of 10.5% and an embedded cost of debt of 5.1%[96]. - GSWC is tracking incremental drought-related costs in a memorandum account for future recovery as authorized by the CPUC in 2021[169]. Drought and Environmental Impact - As of April 26, 2022, 41% of California was in "Extreme Drought," down from 53% the previous year, while 95% was in "Severe Drought," compared to 88% a year ago[169]. - GSWC's service areas that rely on groundwater experienced lower levels due to drought, prompting mandatory water restrictions in certain areas[169]. - The California governor's executive order calls for urban water suppliers to reduce water use by 20-30%, with GSWC assessing supply conditions and potential restrictions[169]. - GSWC expects to incur additional capital and operating costs to maintain water quality standards due to environmental regulations and anticipated stress on water resources[164].

Financial Data and Key Metrics Changes - Earnings per share (EPS) increased by 9.4% to $2.55 for 2021 compared to $2.33 in 2020, driven by higher performance in the Water segment due to new rates authorized by the California Public Utilities Commission (CPUC) [6][10] - Consolidated diluted earnings for Q4 2021 were $0.55 per share, slightly up from $0.54 per share in Q4 2020 [11] - Consolidated revenue for Q4 2021 decreased by $7.6 million compared to the same period in 2020, primarily due to lower construction activity in the contracted services segment [12] Business Segment Data and Key Metrics Changes - Water segment earnings increased by $0.21 per share in 2021, attributed to a $15.5 million increase in water revenues from new rates [14] - Electric segment earnings remained stable at $0.07 per share for Q4 2021, with higher revenues offset by increased operating and interest expenses [11] - Contracted services segment earnings decreased to $0.13 per share in Q4 2021 from $0.17 per share in Q4 2020, mainly due to reduced construction activity [12] Market Data and Key Metrics Changes - Water usage by customers decreased by 29% and electric usage by 5% since 2007, despite an increase in the number of customers [9] - The average water rate base authorized by the CPUC grew from $752.2 million in 2018 to $980.4 million in 2021, with a projected increase to $1.152 billion in 2022 if approved [20] Company Strategy and Development Direction - The company plans to invest $140 million to $160 million in capital projects in 2022, continuing its focus on infrastructure reliability [16] - A joint settlement agreement with the CPUC is expected to allow continued investment in water systems through 2024 [8][17] - The company aims to reduce greenhouse gas emissions by 60% by 2035, reflecting its commitment to environmental social responsibility [8] Management's Comments on Operating Environment and Future Outlook - Management expressed optimism for 2022 and beyond, citing strong performance in 2021 and a commitment to customer service and community support [10] - The company is closely monitoring regulatory changes and the impact of inflation on operating costs, particularly in the electric segment [35] Other Important Information - The company has increased its annual dividend by 9%, marking the 67th consecutive year of dividend increases [10][22] - The company has been recognized for its gender balance, with 56% of its Board of Directors being women [8] Q&A Session Summary Question: What caused the decrease in maintenance expenses for 2021? - Management indicated that the decrease was due to less unplanned maintenance work compared to 2020, which had higher emergency maintenance needs [24][25] Question: Is the increase in short-term debt related to the timing of long-term debt issuance? - Management acknowledged the increase in short-term debt and noted that it is related to timing differences in capital needs [26] Question: How does the company view the upcoming cost of capital adjustments? - Management highlighted that the cost of debt is expected to decrease, which will positively impact revenues by approximately $7.5 million [41] Question: What is the expected capital expenditure for the electric segment in 2022? - Management suggested that capital expenditures for the electric segment could range between $15 million to $20 million, depending on ongoing projects [44] Question: Is the company involved in bidding for military contracts? - Management confirmed active participation in bidding for military contracts, including a bid for naval station Mayport [57]

American States Water Company (NYSE:AWR) Q3 2021 Earnings Conference Call November 2, 2021 2:00 PM ET Company Participants Bob Sprowls – President and Chief Executive Officer Eva Tang – Senior Vice President-Finance and Chief Financial Officer Conference Call Participants Angie Storozynski – Seaport Jonathan Reeder – Wells Fargo Operator Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company Conference Call discussing the company's Third Quarter 2021 Results. The call ...

Part I Financial Information [Item 1. Financial Statements](index=4&type=section&id=Item%201.%20Financial%20Statements) Presents unaudited consolidated financial statements for AWR and GSWC, including balance sheets, income statements, cash flows, and notes [American States Water Company (AWR) Consolidated Financial Statements](index=5&type=section&id=American%20States%20Water%20Company%20(AWR)%20Consolidated%20Financial%20Statements) AWR Consolidated Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$1,874,800** | **$1,791,603** | | Net Property, Plant and Equipment | $1,594,546 | $1,512,043 | | **Total Liabilities** | **$1,195,865** | **$1,149,930** | | Long-term Debt | $412,093 | $440,348 | | **Total Common Shareholders' Equity** | **$678,935** | **$641,673** | AWR Consolidated Income Statement Highlights (in thousands, except per share amounts) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | **$136,755** | **$133,688** | **$382,229** | **$364,043** | | Operating Income | $42,784 | $39,807 | $110,960 | $101,222 | | **Net Income** | **$28,153** | **$26,530** | **$73,997** | **$66,214** | | Fully Diluted EPS | $0.76 | $0.72 | $2.00 | $1.79 | AWR Consolidated Cash Flow Highlights - Nine Months Ended Sep 30 (in thousands) | Cash Flow From | 2021 | 2020 | | :--- | :--- | :--- | | Operating Activities | $81,923 | $87,843 | | Investing Activities | ($106,492) | ($94,637) | | Financing Activities | ($5,027) | $13,587 | [Golden State Water Company (GSWC) Financial Statements](index=11&type=section&id=Golden%20State%20Water%20Company%20(GSWC)%20Financial%20Statements) GSWC Balance Sheet Highlights (in thousands) | Metric | Sep 30, 2021 | Dec 31, 2020 | | :--- | :--- | :--- | | **Total Assets** | **$1,618,114** | **$1,560,782** | | Net Utility Plant | $1,471,740 | $1,400,489 | | **Total Liabilities** | **$1,015,750** | **$977,484** | | **Total Common Shareholder's Equity** | **$602,364** | **$583,298** | GSWC Income Statement Highlights (in thousands) | Metric | Q3 2021 | Q3 2020 | YTD 2021 | YTD 2020 | | :--- | :--- | :--- | :--- | :--- | | **Total Operating Revenues** | **$102,768** | **$98,701** | **$269,430** | **$275,846** | | Operating Income | $35,459 | $33,149 | $87,295 | $85,416 | | **Net Income** | **$22,797** | **$21,143** | **$55,988** | **$53,264** | [Notes to Consolidated Financial Statements](index=17&type=section&id=Notes%20to%20Consolidated%20Financial%20Statements) - On July 1, 2020, GSWC transferred its electric utility assets and liabilities to Bear Valley Electric Service, Inc. (BVESI), which became a direct, wholly-owned subsidiary of AWR, a reorganization that did not substantively change AWR's operations or business segments[63](index=63&type=chunk)[100](index=100&type=chunk) - Due to the COVID-19 pandemic, GSWC and BVESI suspended service disconnections for non-payment, recording approximately **$8.5 million** in CPUC-authorized memorandum accounts as regulatory assets for future recovery of incremental costs, which have not impacted earnings[64](index=64&type=chunk)[76](index=76&type=chunk) - The aggregate remaining performance obligations for the contracted services segment (ASUS) were **$3.3 billion** as of September 30, 2021, expected to be recognized as revenue over the remaining 33 to 47 years of the 50-year contracts[71](index=71&type=chunk) - BVESI's purchased power contracts are accounted for as derivatives, with a **$7.9 million** unrealized gain recorded as a regulatory liability as of September 30, 2021, which did not impact AWR's earnings due to deferral in a memorandum account[83](index=83&type=chunk) - AWR paid quarterly dividends of **$0.365 per share** in Q3 2021, up from **$0.335 per share** in Q3 2020, with total dividends for the first nine months of 2021 at **$1.035 per share** compared to **$0.945 per share** in the same period of 2020[82](index=82&type=chunk) [Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations](index=31&type=section&id=Item%202.%20Management%27s%20Discussion%20and%20Analysis%20of%20Financial%20Condition%20and%20Results%20of%20Operations) Management discusses financial condition and results for Q3 and YTD 2021, covering segment performance, liquidity, capital, and regulatory issues [Results of Operations](index=36&type=section&id=Results%20of%20Operations) Q3 2021 Diluted EPS by Segment vs. Q3 2020 | Segment | Q3 2021 EPS | Q3 2020 EPS | Change | | :--- | :--- | :--- | :--- | | Water | $0.62 | $0.57 | +$0.05 | | Electric | $0.04 | $0.04 | $0.00 | | Contracted Services | $0.11 | $0.10 | +$0.01 | | AWR (parent) | ($0.01) | $0.01 | ($0.02) | | **Consolidated Total** | **$0.76** | **$0.72** | **+$0.04** | YTD 2021 Diluted EPS by Segment vs. YTD 2020 | Segment | YTD 2021 EPS | YTD 2020 EPS | Change | | :--- | :--- | :--- | :--- | | Water | $1.51 | $1.35 | +$0.16 | | Electric | $0.14 | $0.13 | +$0.01 | | Contracted Services | $0.35 | $0.30 | +$0.05 | | AWR (parent) | $0.00 | $0.01 | ($0.01) | | **Consolidated Total** | **$2.00** | **$1.79** | **+$0.21** | - The Water segment's earnings increase was primarily driven by new CPUC-authorized rates, with the full third-year step increase effective January 1, 2021, expected to add **$11.1 million** in revenue less water supply costs for the full year[121](index=121&type=chunk)[129](index=129&type=chunk) - The Contracted Services segment's year-to-date earnings increased by **$0.05 per share** due to higher construction activity, increased management fees from economic price adjustments, and lower operating expenses, with a projected full-year contribution of **$0.45 to $0.49 per share** for 2021[131](index=131&type=chunk) [Liquidity and Capital Resources](index=52&type=section&id=Liquidity%20and%20Capital%20Resources) - The company's regulated business is capital intensive, with projected company-funded capital expenditures for 2021 between **$130 million** and **$140 million**[195](index=195&type=chunk)[201](index=201&type=chunk) - As of September 30, 2021, AWR had **$162.0 million** outstanding on its **$200.0 million** credit facility, and its subsidiary BVESI had **$28.0 million** outstanding on its separate **$35 million** facility[195](index=195&type=chunk) - AWR has increased its annual dividend for **67 consecutive years** and maintains a policy to achieve a compound annual growth rate in the dividend of more than **7%** over the long term, with a Q4 2021 dividend of **$0.365 per share** approved[197](index=197&type=chunk)[237](index=237&type=chunk) - In March 2021, S&P affirmed an **A+ credit rating** for both AWR and GSWC but revised the rating outlook to **negative** from **stable**[197](index=197&type=chunk) [Regulatory, Environmental, and Water Supply Matters](index=56&type=section&id=Regulatory%2C%20Environmental%2C%20and%20Water%20Supply%20Matters) - GSWC filed a general rate case for 2022-2024, requesting a capital budget of approximately **$450.6 million**, with new rates expected to be retroactive to January 1, 2022, despite a final decision not expected by the end of 2021[108](index=108&type=chunk) - California is experiencing extreme drought conditions, with **83%** of the state in extreme drought as of October 2021, leading the governor to request a **15%** voluntary water use reduction and GSWC to implement its staged water conservation framework[220](index=220&type=chunk)[222](index=222&type=chunk) - GSWC is addressing PFAS contamination in its water sources by removing some wells from service and tracking incremental costs in a CPUC-authorized memorandum account for future recovery[218](index=218&type=chunk) - BVESI's annual Wildfire Mitigation Plan (WMP) was approved by the CPUC in September 2021, with related costs being tracked for future recovery and an examination by an independent firm in progress[213](index=213&type=chunk) [Item 3. Quantitative and Qualitative Disclosures About Market Risk](index=61&type=section&id=Item%203.%20Quantitative%20and%20Qualitative%20Disclosures%20About%20Market%20Risk) The company's market risk disclosures, covering interest rates and commodity prices, are materially unchanged from the 2020 Form 10-K - The company's market risk disclosures, which cover interest rate and commodity price risks, have not materially changed from those reported in the Form 10-K for the year ended December 31, 2020[227](index=227&type=chunk) [Item 4. Controls and Procedures](index=61&type=section&id=Item%204.%20Controls%20and%20Procedures) Management concluded the company's disclosure controls and procedures were effective, with no material changes to internal controls during the quarter - Based on an evaluation as of the end of the quarter, the CEO and CFO concluded that the company's disclosure controls and procedures were effective[228](index=228&type=chunk) - There were no changes in internal control over financial reporting during the quarter that materially affected, or are reasonably likely to materially affect, these controls[229](index=229&type=chunk) Part II Other Information [Item 1. Legal Proceedings & Item 1A. Risk Factors](index=62&type=section&id=Item%201.%20Legal%20Proceedings%20%26%20Item%201A.%20Risk%20Factors) No material legal proceedings are pending, and no significant changes to risk factors have occurred since the 2020 Form 10-K - The company is not involved in any legal proceedings that are believed to be material[231](index=231&type=chunk) - There have been no significant changes in the risk factors from those disclosed in the 2020 Annual Report on Form 10-K[232](index=232&type=chunk) [Item 2. Unregistered Sales of Equity Securities and Use of Proceeds](index=63&type=section&id=Item%202.%20Unregistered%20Sales%20of%20Equity%20Securities%20and%20Use%20of%20Proceeds) Details the repurchase of AWR's common shares in Q3 2021 for the company's 401(k) and Dividend Reinvestment Plans AWR Common Share Repurchases - Q3 2021 | Period | Total Shares Purchased | Average Price Paid per Share | | :--- | :--- | :--- | | July 2021 | 484 | $84.31 | | August 2021 | 315 | $89.80 | | September 2021 | 2,402 | $92.25 | | **Total** | **3,201** | **$90.81** | - The common shares were acquired for employees as part of GSWC's 401(k) plan and for participants in the Dividend Reinvestment Plan, not as part of a publicly announced stock repurchase program[235](index=235&type=chunk)[236](index=236&type=chunk) [Item 5. Other Information](index=63&type=section&id=Item%205.%20Other%20Information) Reports other corporate actions, including the declaration of AWR's fourth quarter dividend - On October 26, 2021, AWR's Board of Directors approved a fourth quarter dividend of **$0.365 per share**, payable on December 1, 2021, to shareholders of record on November 15, 2021[237](index=237&type=chunk) [Item 6. Exhibits](index=64&type=section&id=Item%206.%20Exhibits) Lists documents filed as exhibits to the Form 10-Q, including bylaws, debt agreements, and officer certifications

American States Water Company (NYSE:AWR) Q2 2021 Earnings Conference Call August 3, 2021 2:00 PM ET Company Participants Bob Sprowls - President and Chief Executive Officer Eva Tang - Senior Vice President of Finance and Chief Financial Officer Conference Call Participants Angie Storozynski - Seaport Jonathan Reeder - Wells Fargo Operator Ladies and gentlemen, thank you for standing by. Welcome to the American States Water Company Conference Call discussing the company’s Second Quarter 2021 Results. The cal ...